Binance <> Malta Stock Exchange Form Partnership

Binance has announced a partnership with the Malta Stock Exchange by way of Memorandum of Understanding to jointly develop a security token exchange. Through this partnership Binance seeks to evolve its business alongside the perception that the security token market may develop to be even more consequential than the traditional equity market. Similarly, Malta as a jurisdiction pursues substantive progress to cement its recognition as a blockchain-friendly regulatory environment.

Using our ecosystem framework established in our Security Token Ecosystem article, we assess that partnerships between crypto exchanges and smaller national stock exchanges will be a growing trend in the security token industry.

We also assess that this new mode of partnership will subject pure security token exchanges to significant external pressures, forcing them to accelerate development timelines and user acquisition.

By pooling resources, crypto exchanges and small national stock exchanges are able to strategically compensate for each other’s vulnerabilities.

Crypto exchanges, for example, have a massive captive user base that is already familiar with trading cryptocurrencies. In fact, Binance regularly reports daily volumes greater than USD$1 billion. However, what Binance lacks is a transnational securities regulation compliance framework and the holy grail of secondary market liquidity: institutional money.

Small national stock exchanges, on the other hand, have domicile in cypto-friendly jurisdictions, are already compliant with securities regulation and have access to institutional investors and traders. What they lack is high turnover, a user base that understands crypto, and a competitive advantage over larger national stock exchanges such as the NYSE.

A collaboration between the two creates an entity that is highly competent in crypto trading, has a massive user base that is comfortable trading crypto and equity, has the regulatory understanding to support securities trading, and has access to institutional funds and a supportive jurisdiction. This entity will thus theoretically have the initial traction to begin developing a competitive advantage over the larger national stock exchanges that seek to develop security token trading in-house (such as SIX Swiss).

Crypto Exchanges

Have

Massive captive crypto user base

High daily volumes

Lack

Regulatory framework

Institutional money

Small National Stock Exchanges

Have

Crypto friendly jurisdictions

Regulatory compliance

Institutional money

Lack

High turnover

Crypto user base

Competitive advantage over large stock exchange

Partnerships

Have

Massive captive crypto user base

High daily volumes

Crypto friendly jurisdictions

Regulatory compliance

Institutional money

Lack

Nothing

Ultimately, this development poses the greatest threat for pure security token exchanges.

Pure security token exchanges have identified various shortcuts that will reduce the time it takes for them to develop and launch their product. We cover these extensively in our analysis article The Security Token Ecosystem.

However, the fact of the matter is that security tokens want to excel in two domains (crypto and securities) that are already owned by industry incumbents. Whereas these industry incumbents already have product market fit, a large user base and significant traction, pure security token exchanges are still in various stages of development.

This is not to say that pure security token exchanges will not become a major driving force in the industry. Our view is simply that competition for turnover in the security token industry is just starting to heat up.

We assess that the window of opportunity for exchange players to jostle and assert market dominance is closing quicker than many might realize. Fervent competition among exchanges will ultimately accelerate adoption of the entire security token industry as a whole.

Site

Follow Us

Disclaimer

Security Token Network is not a registered broker-dealer or investment advisor in any jurisdiction. You cannot invest in any financial product or buy tokens through our website. Nothing published on Security Token Network should be constituted as investment advice or an endorsement of any project. All investments entail risk and you should seek professional investment advice from a licensed financial advisor before making any investment.

We use cookies to help us produce great content and are mandated to ask by the EU. Read More

Privacy Policy

Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping us understand which sections of the website our readers find most interesting.

Cookie Policy

We use the following cookies:

•Google Analytics - So we know what's working on STN, for example what content performs best.

• CloudFlare - These guys keep us safe from the bad guys.

•Zoho - For form submissions, such as contacts and newsletter subscriptions.